Tue July 2, 2013

Former Energy Secretary Wants Power Generation Decentralized

President Obama announced, last week, a hugely ambitious plan to reduce greenhouse gas emissions and push the country towards cleaner energy. Right now, just nine percent of our energy consumption comes from renewable sources.

Former U.S. secretary of energy Steven Chu would like to see us get to 50 percent by the middle of the century. Chu left the cabinet in April, but even before that, he began talking to utility companies could adopt a radically different business model.

STEVEN CHU: Well, it goes back to an old business model that the old AT&T used to have. They sold you phone service. They would supply you with the phone. They owned the phone. They maintained the phone.

MONTAGNE: Similarly, Chu would like utilities to start installing solar panels and batteries, storage units in people's homes. The idea hasn't gained much traction yet, but Steven Chu remains hopeful, and discussed with us how he sees utility companies making this work.

CHU: They will say, allow us to use your roof, allow us to use a little corner of your garage, and we will equip you with solar power. We own it. We maintain it. We're responsible for it. You don't have any out-of-pocket expenses. You just buy electricity at the same rate, or maybe even a lower rate. In addition to that, you have, you know, like five kilowatts of energy storage in your home. And five kilowatts - when you're in a blackout situation and you want to keep your refrigerator going, you want to keep a couple of energy-efficient light bulbs lit at night - that goes a long way.

MONTAGNE: Well, how do you expect to get utilities though, to go for this transformation - given that they have huge investments in their system that they already work with?

CHU: Well, I think it's going to become increasingly attractive for a couple of reasons. First, the utility companies can put energy storage in a benign environment - inside, away from the wind or rain, the hot and the cold, and they can use that energy storage in a distributed way to level out the load, take care of the little balancing that they do all the time today, by simply overloading their lines slightly and letting the energy dribble out.

MONTAGNE: Well, have you talked to utilities about this yourself?

CHU: I have. In the last year while I was secretary, I began to raise this as a possibility. Because right now you realize that as solar becomes less and less expensive, as more homeowners on their own do this, where they get to sell you back electricity at essentially retail price until it zeros their energy bill out. Well, this is not good for a utility company because they still have to maintain the wires, the billing, the reliability and all these other things, so when it's half a percent of the customers or a quarter percent of the customers, they don't care. When it's five, 10, 15 percent of customers, it's a big deal. And so you definitely need a new business model.

MONTAGNE: It sounds little like maybe a comparison would be how the adoption of the Internet disrupted old media and really forced it to get on board with the Internet.

CHU: Well, during this last year when I talked to utility companies - and the regulators - I'd say, this is going to come, so let's start thinking about it now. Form a new business model so that you have a growth industry. You're still supplying electricity, you're just doing it slightly differently. You're still going to need smart meters and smart grids and all these other things, but you can do it much more sensibly and it will lead to, actually, a more stable grid.

MONTAGNE: Steven Chu, thank you very much for joining us.

CHU: My pleasure.

MONTAGNE: Steven Chu was U.S. secretary of energy in the Obama administration until this past April. He's now a professor of physics and molecular and cellular physiology at Stanford University. Transcript provided by NPR, Copyright NPR.